NBC THINKS, SPENDS BIG WITH OLYMPICS

One billion, 270 million dollars. That's about one-fifth the current market value of CBS. It's also what NBC just shelled out for the rights to air only four weeks of programming sometime in the next century.

Put another way, NBC is paying as much for U.S. TV rights to the 2000 Summer Olympics in Sydney and the 2002 Winter Games in Salt Lake City as it took from the entire prime-time upfront marketplace this year.

For four weeks of programming? By anyone's standards, the pre-emptive bid was a bold, risky move. But not necessarily unwise.

If big event TV is the future of free, over-the-air networks, as NBC President Bob Wright says, then NBC and parent General Electric Co. just sent the strongest signal possible about their intentions for the 21st century.

"In the wake of the Disney/Cap Cities and Westinghouse/CBS deals, people would have been writing articles saying, `What will NBC do?' Now there won't be any of those articles," said Jay Nelson, an analyst with Brown Bros., Harriman & Co., New York.

"The question shouldn't be, `What will NBC do next?' It should be, `Look at what NBC has done,'*" said Mr. Rogers, president of NBC Cable & Business Development.

Mr. Rogers said NBC is midway through an internal growth "trajectory" that has grown it from a roughly $6 billion company a few years ago to one now valued around $10 billion, largely through diversification into new media like cable TV and through multimedia via an aggressive overseas expansion plan.

"If we were not a multichannel company, we could not have done this deal," he said. "The Olympic Committee basically said, `We want a multichannel presence,' and we were able to leverage that."

NBC's multichannel presence also will enable it to amortize lofty Olympics costs. When production and marketing costs are added, the bill for the 2000 and 2002 Olympics will be well in excess of $1.5 billion.

To cover that with the few hundred hours of Olympics coverage a network normally would devote to the Games, NBC would have to sell each Olympic ad minute for nearly $1 million.

But NBC's CNBC and America's Talking cable channels will be able to offer viewers and advertisers hundreds of additional hours of coverage. And that additional programming will translate into thousands of Olympic ad units that will offset the high-price packages of NBC network sponsors and likely offer smaller advertisers their first opportunity to play on an Olympic scale.

Assuming NBC's cable outlets fetch an average $25,000 per Olympic ad minute, they could reap upwards of $500 million.

Ironically, NBC's new triple-channel Olympics play seems reminiscent of its ill-fated 1992 Olympics TripleCast, a pay-per-view event that produced only mediocre sales. But while the TripleCast was a marketing failure, Mr. Rogers said it was well received by the Olympics committees because it offered more exposure to lesser-known Olympics events. The TripleCast was Mr. Rogers' brainchild.

NBC and GE executives don't believe the Olympic bids are as risky as do many outsiders. After calculating potential ad spending, the relative cost of money and the rate of inflation over the next seven years, NBC internally places a risk on the investment of less than $100 million.

NBC's Mr. Rogers declined to comment on other multimedia properties that could be developed via the rights, but he said "stay tuned, you will be seeing more on that very soon."

NBC executives have made no secret of the fact they'd still like to team up with Ted Turner or possibly Time Warner. In the meantime, Mr. Rogers said there is plenty of near-term growth to build from existing assets, including a burgeoning multimedia business that will be kick-started via NBC's partnership with the Microsoft Network and closer tie-ins with other NBC cable interests, including minority-owned Court TV, Arts & Entertainment Network and the History Channel.

Among other things, Mr. Rogers said NBC might distribute Court TV's coverage of the Bosnian war crimes Tribunal on NBC Super Channel in Europe.